A Tale of Two Markets

These days it seems like you need a graduate degree in math or statistics to figure out the Laguna Niguel real estate market.  We are always hearing, “Where are the comps?” (comparable sales)  Have you heard it said that you can manipulate statistics?

Here are some stats that are holding steady. Attached homes (condos and townhomes) have a higher percentage of distressed sales. Today there are 163 active attached  listings and 49 percent of them are distressed sales (short sales and REOs). For all active detached homes on the market today
the numbers are better. Today there are 232 active properties and 18.5 percent of them are distressed listings. These percentages have been holding steady for a couple of years now. Another stat that is holding steady is that for homes priced over $700K the distressed rate is about 13 percent.

The two real estate markets we were referring to are the distressed and the standard sales.  Our experience is that about half of the home buyers are today are investors looking for the awesome deal on a distressed property. The
remaining home buyers just want a good property, at a great interest rate and a fair price.

Just looking at a one-line list of sales is very deceptive today. Here's an example.  A recent sale of a bank-owned (REO) property appears to be way below the comparable sales. Also since there are relatively few closings in
this tract this year it seems devastatingly low. How is this to be interpreted? Actually this home is not a real comparable. The home had multiple slab leaks, was neglected and outdated. What the one-line list doesn’t tell you is that this home was uninhabitable. No buyer could obtain a loan on the property so it sold very low and in multiple offers to cash-only buyers.

Here's another example in the great  neighborhood of Kite Hill.  A 3000-square foot foreclosure on a nice cul-de-sac appears to be an awesome deal. After viewing the property we now know why it is NOT and why it will be a false comp when it does sell. Why? It has water damage and a leaky roof. An
uniformed buyer may see the price per square foot and try to  extrapolate this to other listings in the area. This would be misleading for sure. 

So, it pays to be a well-informed buyer. Happy Hunting!